Black Sea wheat exporters keep shipping despite thin stocks

Black Sea wheat producers have enough in stock to keep some exports flowing for the last two months of the season, keeping pressure on the world market which had all but written them off. Ukraine and Russia have almost exhausted their exportable surplus for the 2012/13 season due to lower harvests last year and a high pace of shipments in the first half of this season, due to high foreign demand and lucrative prices, analysts said.
The two, which have already sold abroad more than 20 million tonnes of wheat this season, can export no more than 1 million tonnes of the commodity in the remaining two months of the 2012/13 marketing year. Analysts and traders forecast that Russia, which exported 27 million tonnes of wheat in 2011/12, was likely to export about 250,000-500,000 tonnes of wheat during May and June despite low stocks.
Last week, Ukraine, the sixth-largest wheat exporter this season according to USDA estimates, lifted restrictions on wheat sales, and analysts estimate the volume of additional exports will be up to 300,000 tonnes. Continued Black Sea exports, although severely reduced, are a headache for competitors. "Weak EU wheat exports of 237,000 tonnes in the last reporting week point to growing competition as a result of cheap supply from the US and the resumption of exports from the Black Sea region," said Commerzbank in a daily commodities note.
Traders estimated Black Sea wheat was trading at around a $30 per tonne discount to US soft red wheat on a cost and freight basis to North Africa. "The world wheat balance sheet is not as tight as some people speculated it could have been," said a European trader. "The only reason the EU sustained an export programme for as long as it did and the size that it did was because of the problems in South America with production and the Black Sea wouldn't allow anymore exports."
Traders said that North African destinations in need of imports were likely to hold off until the new crop becomes available from July. "Demand is slow because consumers are bearish. They're going to buy as little as possible until the new crop comes," said a European trader.